Illness of Petitioner: Delhi HC directs to Restore GST Registration for 30 days for Filing Returns [Read Order]

The Delhi High Court, recently issued a directive to restore the Goods and Services Tax (GST) registration of a petitioner for 30 days to allow them to file their outstanding returns.

The petitioner, whose GST registration was cancelled retrospectively due to non-filing of returns for over six months, argued that they were unable to comply due to illness but were now prepared to submit the required filings.

The petitioner had failed to furnish the returns for a continuous period of six months.  In view of the above, the proper officer issued the Show Cause Notice dated 13.01.2023 (hereafter the impugned SCN) calling upon the petitioner to show cause as to why the petitioner’s GST registration not be cancelled on account failure to furnish the returns for a continuous period of six months. 

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here.

The petitioner was directed to furnish a reply within a period of thirty days from the date of the service of the impugned SCN and was also directed to appear before the proper officer on 10.02.2023 at 11:00.  Additionally, the petitioner’s GST registration was suspended from the date of the impugned SCN, that is, with effect from 13.01.2023. 

In view of the above, the petitioner’s GST registration was cancelled by the impugned cancellation order, albeit with retrospective effect from 01.07.2017. Apart from referring to the impugned SCN, the impugned cancellation order did not mention any other reason for its issuance. 

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here.

The petitioner filed an application dated 15.03.2023 seeking revocation of the impugned cancellation order, which was rejected by an order dated 07.11.2023. The petitioner preferred an appeal against the impugned cancellation order, which was rejected by the impugned order, since it was filed beyond the period of three months.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here.

The petitioner’s case was that he had failed to file the returns as he was unwell. However, the petitioner, represented by Mr  M A Ansari and Ms Tabbassum Firdause, Advocates stated the readiness to furnish the GST returns.

The bench of Justices Vibhu Bakhru and Sachin Datta observed that, “Section 29(2) of the CGST Act/the DGST Act expressly empowers the proper officer to cancel the GST registration including with retrospective effect if any of the conditions as set out in the said provision are satisfied.  However, it is settled law that such an exercise is to be informed by reasons and the tax payer’s registration cannot be cancelled retrospectively whimsically or arbitrarily. It is required to be based on some cogent reasons.”

It was noted that, “In the present case, the impugned cancellation order does not reflect any such reasons.”

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here.

The Delhi High Court Bench noted that the retrospective cancellation of the GST registration lacked sufficient reasoning and did not align with the principles of natural justice, as no such cancellation was proposed in the initial show cause notice.

Drawing from the precedent set in the TVL. Suguna Cutpiece Center case by the Madras High Court, the court observed that a taxpayer's GST registration, vital for business operations, cannot be cancelled without providing a fair opportunity to rectify the issue.

Consequently, the Delhi High Court restored the GST registration for the limited period, allowing the petitioner to file the necessary returns.

Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here.

The proper officer was instructed to review the filings and decide on any further action, including the issuance of a fresh show cause notice if needed.

To Read the full text of the Order CLICK HERE

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